Election sweeteners a family affair

After a tumultuous 2018 for the federal Parliament, the early months of 2019 are likely to move into hyperdrive as the major parties begin positioning themselves for the upcoming election.

Each of the major parties has access to a war chest to fund their many promises. Labor's funding will come primarily from proposed tax changes. The Coalition is relying on additional tax receipts from a bumper year of company profits. Both will make big spending promises while pledging to bring the budget back to surplus.

The cooling of the housing market in Sydney and Melbourne will make Labor's capital gains and negative gearing policy changes tricky to implement. Talk of a US recession and some uncertainty around the Chinese economy may affect the government's expected tax receipts beyond 2019, making the Coalition's likely tax cuts and budget surplus harder to deliver.

Despite the softening housing market in Sydney and Melbourne, house prices there are still more than ten times the average salary. For those families renting, the news is no better. Rent in these cities remain high, with the average rental price for a house in Sydney sitting at $540 per week — or just over $28,000 per year.

Despite a $51 billion Christmas spending spree, up almost three per cent on 2017, many Australian families remain anxious about cost-of-living pressures, especially those in Sydney and Melbourne who are also facing a slide in the value of their homes. Wages growth remains relatively low, which is exacerbating a sense of financial unease for many Australian families. For those families on welfare or with single incomes, the outlook for 2019 may be even bleaker.

The problem for many families is that they have no capacity to increase their earnings. We have almost 1.8 million Australians without work or looking for more work. Despite strong profits, businesses are yet to share the spoils of the recent gains with their employees.

Disturbingly, the Fair Work Commission, our independent industrial relations body, accepts that its 2018 National Minimum Wage (NMW) decision will leave some NMW and award-reliant employees in poverty. Single-income families dependent on a NMW or award-reliant employee are experiencing working poverty.

"As the election nears, our politicians will bring forward a raft of sweeteners aimed at securing their base and encouraging others to move their vote. Let's hope they include relief for low-income households with children."

While the Fair Work Commission concedes that the minimum wage is not a living wage for workers with families, they are neither willing nor able to address the financial realities of those sole parents and single-earner couples with children who are struggling to meet the increasing costs of living.

So if the market and an independent arbiter are unable or unwilling to address the cost-of-living pressures, especially for low-income households, should that be the end of the story?

The hip pocket nerve is twitching, sending signals to both the major parties that families need a break from the relentless imposition of fees and charges from financial, health, insurance, phone and energy companies. Both Prime Minister Scott Morrison and Opposition Leader Bill Shorten will be carefully weighing up options in the hope of wooing voters their way.

While regulators such as the ACCC and ASIC pursuing competition policy should in theory dampen excessive and unreasonable increases to the cost of services, their actions have not yet addressed this very live issue for low-income families.

Both sides would be wise to consider revisiting the Howard-era initiative of Family Tax Benefits (FTB) as a means to provide targeted relief to families. Both Labor and the Coalition have taken their fair share out of the FTB bucket as a way to balance the budget. By doing so, they have left many families worse off. The restoration of some of the cuts to FTB would be a good a start.

Critics will argue that revisiting FTB is simply adding to middle-class welfare. But the critics need to concede three things.

First, it's a problem when our industrial relations system fails to address the issue of poverty for some working families. Second, it's a policy failure when economists and the Business Council of Australia agree that the Newstart payment is so woefully inadequate that it is a barrier to employment. Third, it is a national disgrace when we have more than 700,000 children living in poverty.

As the election horizon nears, our politicians will bring forward a raft of sweeteners aimed at securing their base and encouraging others to move their vote. Let's hope that the coming election sweeteners include relief for low-income households with children.

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Existing comments

Fourth, investment in families, still society's most stabilising unit, is an investment that can alleviate the need for inordinate dependency on State.John | 21 February 2019

Well done on pointing out Cleary the growing problem for single income/low income families. A recent example of an unfair cut that hurts families more if they have more
Children is the cap that reduces all FTB part A supplement to Zero if total gross
Family income reaches $80k. Luke | 22 February 2019

Thanks Joe for reminding us of what our political leaders do in the lead up to an election in a desperate bid to win our votes.
I think it is interesting that the super wealthy continually argue that companies cannot afford to pay adequate wages for their employees and safe working conditions.
And the conservative politicians who represent their interests continually claim that they cannot afford to provide an adequate social wage to those who cannot work.
At the same time, they can always find billions to support involving Australia in US initiated wars and giving huge tax concessions to the big corporations and the very wealthy. Some pay little or no tax.
Already, the LNP is gearing up for another stop the boats election with an associated scare campaign about the arrival of asylum seekers by boat. This is dishonest because most new arrivals who have come by air and only 45% are genuine refugees whereas between 88 - 100% of those who come by sea have been genuine.
The big issues for this election are dealing with the environment problems we face, peace, improving social justice at home and abroad and the protection of human rights.
The candidates who will receive my top priority when I vote will be those who will work to make Australia a free, non-aligned and neutral country and who have policies to effectively address the issues mentioned above. Andrew (Andy) Alcock | 22 February 2019

Oh Andy, if only life and our national choices were so simple! But they are not, unfortunately. From both the Howard days and the Rudd/Gillard governments we are left with significant middle class welfare and big ambitious spending items like NBN, NDIS, Gonski, costly subsidies for "renewable" energy etc. As a result we have a large national debt and likely more to come. To afford this and a decent social support net, we need to keep growth going, and our exports and inward investment brisk. Thus, the need to reduce business taxes to stay competitive for international funds, and we need flexible , and highly productive industries. But what we are seeing is national popular demand for high energy costs, stopping coal and agricultural exports, maintenance of high business taxes, loss of high paying jobs, and great danger of recession and austerity. Yes, we could do with wealth taxes, but these need to substitute for high wage and company taxes which are disincentives to hard work and investment in oneself or the community. If we keep going as we are, we will transform Australia from a high-skill, high wage, cheap energy, high employment economy into a basket-case with real widespread poverty. And it`s because we wanted it all, and did not analyse the true costs of the populist Green-left nirvana that is being demanded by our inner city ideological elites; but they are the sort of people that are likely to do OK whatever happens. Eugene | 24 February 2019